DrumBeat: August 10, 2008

In general it may be true that if we were willing - and in some cases able - to pay more for food, then some serious problems with our food system might be solved. The same may be said of our energy system - higher energy prices will make it much easier for renewable energy to come to the fore and will encourage conservation.

The trouble is that along the path towards a better, more sustainable farming and energy system, there will be many casualties. For one thing, there are millions, perhaps billions, of people whose bodies cannot afford to conserve and eat less, because they are already at or below 2,000 calories a day, and eating a diet poor in nutrients. In some cases farmers may be caught in a double bind: higher food prices bring them less money not more - because fertilizer prices, driven by rising oil and gas prices, are climbing even faster than food prices.

HERMINIE, Pa. - For the last two years, cattle farmer Regina Carpenter said, she and her husband, Derwyn, absorbed the rising costs of fuel and feed, but they can no longer afford to hold the line.

"This summer is the first year we were not able to hold back on raising prices. People don't realize how the cost of fuel has affected all farmers," she said. The Carpenters, who raise about 45 beef cattle on 92 acres in Westmoreland County, grow the corn and hay feed for their animals.

ED DAMER, Sudan — Even as it receives a billion pounds of free food from international donors, Sudan is growing and selling vast quantities of its own crops to other countries, capitalizing on high global food prices at a time when millions of people in its war-riddled region of Darfur barely have enough to eat.

TEHRAN (Reuters) - Iran and Algeria are expected to discuss the formation of an OPEC-style gas group during a visit by Algerian president Abdelaziz Bouteflika to Tehran, Iran's ambassador to Algeria said in remarks published on Sunday.

WASHINGTON — The image of President Bush smiling and chatting with Prime Minister Vladimir V. Putin of Russia from the stands of the Beijing Olympics even as Russian aircraft were shelling Georgia outlines the reality of America’s Russia policy. While America considers Georgia its strongest ally in the bloc of former Soviet countries, Washington needs Russia too much on big issues like Iran to risk it all to defend Georgia.

Scotland is drawing up plans to build the world's longest electricity connector - to Norway - to help meet its renewable targets and end its dependence on nuclear power. The whole project could cost more than £2bn.

A 16 per cent jump in natural gas prices, used by electricity providers in the Persian Gulf, has persuaded governments in the region to shift the fuel to production of liquefied natural gas instead of aluminium. The canceled West Asian smelters would have increased world supplies by 2.8 per cent. Even with those projects production wouldn’t have kept pace with global demand that is growing at 9 per cent a year, twice the rate of the world’s economy.

GAZA CITY, Gaza Strip: Gaza's Hamas-run government banned the use of cooking gas to fuel cars in the territory on Saturday, citing expected shortages ahead of the Muslim month of Ramadan.

Earlier this year, Israel slashed fuel shipments in response to attacks from the Gaza Strip, leading to a severe shortage. As a result, around 8,000 Gaza residents converted their vehicles to run on cooking gas, said Ahmad Ali, of the Palestinian Petroleum Commission.

KATHMANDU, Aug 10 - Minister for Industry, Commerce and Supplies Shyam Sundar Gupta Monday said that the price revision is the only alternative to ensure the smooth supply of fuel.

Addressing today’s Constituent Assembly (CA) meeting, Minister Gupta said that the government have been attempting find an alternative sources of energy in order to cope with the unresolved fuel crunch.

The root cause of the power shortage stems from the increasing difficulty in sourcing feedstock for generation. Most of them have either limited or no fossil fuel resources, instead relying on either natural gas sourced from neighbouring states such as Qatar, or diesel from Abu Dhabi. Ras Al Khaimah (RAK), for example, produces only 30m cubic feet per day (cu f/d) of gas, and is forced to import 40m cu f/d from Oman via the Dolphin pipe network, and a further 80m cu f/d from UAQ (one of the few northern emirates with the capacity to export fuel).

Soaring prices have led Ajman to look toward coal for its future energy security. Earlier this month, the emirate signed a Dh7.3bn ($2bn) deal with Malaysian power company MMC to build the Gulf's first coal plant, which is anticipated to come online in early 2012.

WASHINGTON // There is a new enemy in the United States: oil. Actually, it is an old enemy, from the 1970s, when the Arab oil embargo forced a spike in US petrol prices and the president, Jimmy Carter, unhelpfully urged citizens to turn down their thermostats and don sweaters.

But as US residents have watched the price of petrol reach US$4 a gallon (Dh3.99 per litre), the national conversation about the dangers of the country’s oil dependence – and what to do about it – has reached a fever pitch.

Soaring diesel prices have resulted in an $800,000 shortfall for the school system's Department of Transportation. As a result, the number of buses will be cut and buses will run longer routes with more students. Fuel prices are higher than the school system had projected last year when the Howard County Board of Education approved its budget. In September, diesel fuel cost $3.038 a gallon. Last month, diesel fuel cost $4.77 a gallon.

Officials hope to combat the shortfall by reducing the number of buses used and by increasing the number of students on each bus, said David C. Drown, director of transportation for the school system.

You know about the prices — you pay them each month and have watched them climb rapidly in the decade since deregulation occurred. Part of that rise is related to increased prices of oil and natural gas — but only part. The rest of the price rise has been a massive and needless wealth transfer from the Connecticut public to the owners of power plants, most of whom are headquartered in other states.

It hasn’t hit us yet . . . not really. It’s still about hot fun in the summertime. Yeah, sure, we’re a little annoyed by how much it costs to drive to the beach, but thanks to John McCain, we can all laugh at Paris Hilton’s answer to the energy crisis, delivered in a designer bathing suit from a chaise lounge at a Beverly Hills hotel.

But the closer we get to the first frost, the more we are going to realize that the next president (whoever he is) won’t be able to help us, and the current lame duck will already be halfway to his ranch in Crawford, Texas.

The sting we’ve been feeling at the gas pumps is small potatoes compared to the assault and battery waiting for us by the oil tank in our cellars. And by Inauguration Day in early January, we will already be at least a couple of oil deliveries deep into the winter.

Wind power truly is a great resource. We should be using lot’s more of it. And solar, biomass and geothermal, etc.

But, please ask yourself why taxpayers should foot the bill for oil billionaire T. Boone Pickens, so he can connect his intended wind farm to government subsidized transmission line infrastructure? Heck, his financial statement is not bleeding red ink like the U.S. Treasury.

The 85-metre circular solar panel is an incongruous feature on the otherwise empty salt plains and desert near Ras al Khaimah city but, as a potential part of the answer to the UAE’s growing energy crisis, installations like it could soon become a common sight.

This futuristic structure is the land-bound prototype of an even larger man-made “solar island” that may float several hundred metres off the coast of the Emirate, supplying the energy needs of up to 200,000 homes.

Three years ago, in an alarming finding, tests by the federal Geological Survey showed the lake had some of the highest mercury readings ever recorded in a body of water in the United States. The state warned people not to eat certain kinds of ducks because of the mercury.

...Researchers say mercury released into the atmosphere from coal-fired power plants in the West, gold mines in Nevada, volcanoes in Indonesia or industries in rapidly developing countries such as China or India may be settling in the lake.

In the world’s driest places, the future of drinking water may flow from a wastewater-recycling plant.

Big Oil, No Mojo: With BP battered in Russia, and Total looking beyond petrol to nukes, what does the future hold?

The escalating dispute is emblematic of the problems facing Big Oil—shrinking access, falling profit margins, underinvestment in equipment and technology and a business model that's increasingly questioned. Major Western oil companies like BP, Exxon and Shell have dominated the industry for more than half a century, but the skyrocketing price of crude has shifted power to the countries owning the oil in the ground. They favor their own national oil companies, and are demanding an increasing slice of the pie—when they deign to share it at all. It's no wonder investors seem to be losing confidence in Big Oil's business model: last week, after Exxon reported the largest quarterly profit in global corporate history, its share price fell by 2 percent, and has now fallen 12 percent so far this year. With Exxon struggling to bring new fields on line, gas and oil production was actually down by 8 percent. The company spent a record 66 percent of last year's cash flow on stock buybacks and dividends—for lack of better investment opportunities.

"Oil is at a tipping point. It is an exaggeration to cry that a bubble has burst. It is a break," said Ellis Eckland, an independent analyst based in Chicago who insisted the "oil market was not in a bubble."

For James Williams at WTRG Energy, the law of supply and demand reins.

"The market is simple reflecting the fundamentals of supply and demand. Markets participants are considering the world slowdown, the deterioration in expectations for the growth worldwide," Williams said.

The slowdown in economic growth has a significant impact on energy consumption, analysts say.

The drop in fuel consumption has been cited as the main reason crude futures slid more than 20 percent since mid-July -- begging the question of how quickly demand could return if prices keeping dropping.

"Some of this demand slowdown is definitely permanent. The question is how much," said Kyle Cooper, analyst at IAF Advisors in Houston. "Even if Americans return to their old driving habits, it will likely be in smaller cars."

MOSCOW (Reuters) - Russian warships are not planning to block shipments of oil from Georgia's Black Sea port of Poti, but reserve the right to search ships coming to and from it, Russian Deputy Foreign Minister Grigory Karasin said on Sunday.

"I know nothing about any plan to block the shipments," he told a news briefing, responding to remarks by Georgian officials. "In fact the fact that ships are being stopped and searched does not mean there is a blockade."

BAKU (AFP) — Azerbaijan has halted oil exports via the Georgian ports of Batumi and Kulevi due to clashes between Russia and Georgia, the head of the state oil company said Saturday.

"Since last night the import and export of oil through the Georgian ports of Kulevi and Batumi have been halted," said Rovnag Abdullayev, the head of the Azeri state oil company SOCAR, in televised comments.

"This is due to armed actions in the area of the Georgia-Ossetia conflict."

KUWAIT (Agencies): Kuwait said on Saturday that fellow oil exporter Iraq is likely to report a budget surplus this year and should repay its debts. “Iraq’s debt to Kuwait is an old debt ... It has to be paid or Iraq has to pay its interest. These are the rights of the Kuwaiti people,” state news agency KUNA quoted Foreign Minister Sheikh Mohammad al-Sabah as saying in a television interview. The debt, estimated at $15-16 billion, represents loans Kuwait made to Baghdad in the Saddam Hussein era, mostly during the 1980-1988 Iraq-Iran war. “The economic situation in Iraq is witnessing a big improvement this year and Iraq will have a large surplus in the budget,” Sheikh Mohammad said, apparently referring to the six-fold rise in oil prices since 2002 which has generated huge revenues for oil exporters.

The oracles of “peak oil” are again predicting the demise of petroleum. World production appears stuck at 85 million barrels per day against growing demand in China and India. Our imports carry a $700 billion annual price tag, while Democrats chorus: “We can’t drill our way out of the problem.”

Consider that premise. Geologists say a huge quantity of hydrocarbons (oil and natural gas) lies buried at various places around the globe or on the sea floor (methane hydrates). Just released, an international study estimates more than 90 billion barrels of recoverable oil remain in the Arctic alone.

WASHINGTON (AP) — No matter who moves into the White House in January, energy problems will hit him with the punch of a winter storm.

Republican presidential candidate John McCain and his Democratic rival, Barack Obama, agree that the era of cheap energy and abundant supplies is over. Both have called for breaking away from the nation's overwhelming oil dependency while dueling bitterly over how to do it. Neither has suggested heavy-handed government intervention such as price controls imposed in response to the 1970s oil crisis.

The energy apocalypse has arrived, say doomsayers. In fact, it came a few years ago, when the world reached the maximum rate of petroleum production, known as the peak oil. Output has been declining since then. The doomsayers say the trend will only accelerate, with grave consequences for the world economy.

But most mainstream energy economists throw cold water on what they see as these overheated predictions.

Americans today spend almost as much on bandwidth – the capacity to move information – as we do on energy. A family of four likely spends several hundred dollars a month on cellphones, cable television and Internet connections, which is about what we spend on gas and heating oil.

(ENS) - Five scientists from the New York-based Wildlife Conservation Society had to evacuate their remote field camp in northern Alaska because of a new kind of threat brought on by global warming - a polar bear stranded on land.

Polar bears would normally be out on sea ice this time of year, the WCS says, but with recent warming the ice is miles from shore and bears are becoming increasingly trapped on land well away from their prey of seals.

I have developed the following concept, but I am not sure about the name or description.

The basic concept is the marginal cost vs. the average cost of different transportation modes as they are enlarged. To illustrate:

With roads a 33% increase in capacity will often cost (in either congestion or capital costs) as much as the inflation adjusted price of the original capacity. The more we use roads, the more they cost The average costs increase with volume because the marginal cost is higher than the historic average cost.

OTOH, both Urban Rail and Inter-City freight and passenger rail have marginal capacity costs much below the average costs. Railroads can increase capacity with improved ROW improvements (faster track with improved curves & track quality), better signals, more passing sidings, electrification and double tracking (x3 to x4 the capacity of single tracks). These same improvements also increase the speed and reliability of shipments. with general economic benefits.

Urban Rail can add more cars to trains, decrease headways between trains and simply crowd the trains more. Only the Lexington Avenue subway in the USA is currently at ultimate capacity (building the parallel 2nd Avenue subway should be a priority). Adding cars, adding trains (Moscow subway has 90 second headways !) and adding pax to trains (see Tokyo subway pushers for extreme limits); all are MUCH cheaper than building all new lines.

The more we use rail, the lower the average costs

I hope that I have explained the concept well enough (which is interesting and important in a post-Peak Oil economy) but is there a better name ?

Interesting, but I for one need more convincing. A few questions, some are rhetorical:

Aren't you tilting the comparison by constraining road to no incremental investment? What about road-integrated incremental investment like the Bogota Transmilenio?

Do you have lateral (non-cherrypicked) historical data to demonstrate your thesis? Any good counterexamples? Why is commuter rail travel in London such an expensive and miserable experience, and why does it only ever seem to get worse?

How does this model work for other transport modes, including ones that no longer exist (at least in the West)?

Did you get a chance to look at the McKay sustainable-energy book yet, by the way?

I was talking about incremental investment. Increasing I-10 West in Houston to 14 lanes (# from memory) by buying the old KATY RR ROW. adding freeway lanes just about anywhere has higher incremental costs (even 4 lanes > 6 lanes for rural interstates typically costs more than half of the inflation adjusted original 4 lanes, although not dramatically more and some contra examples exist for rural interstates. From memory 6 lanes carry about ~45% more traffic than 4 lanes. Increased lane changes are the reason given).

I personally hate BRT (as least as promoted by GWB). I have ridden the Lex at the tail end of the rush hour (8:40 AM or so) and it was MUCH better than the worst public transit experience I have ever had. The southern terminus of the Miami Metro (extraordinarily pleasant view, the orange-red trees were in bloom, all else nice) transfers to BRT on a bus & official vehicles only busway. Desperately crowded, smelly armpits (it was June from memory) raised all around as the bus jerks and rolls like overloaded buses do, with a/c less than needed. And the GWB administration points to how much cheaper and successful this particular BRT was than extending Metrorail further south.

I noted a mixed crowd on MetroRail, but the last of the apparently middle class people walked towards the Park & Ride at the southern terminus and only a subset waited for the BRT.

I'm sure there something useful in your model, but we won't get to it by quoting our favorite and unfavorite road and rail journeys at each other (Guilty, Yer Honner). Is it fair to compare 1->2 track rail with a 4->6 lane highway upgrade? Shouldn't we be looking at 1->2 (roads and rail with sidings or turn-offs) or 4->6 for both modes? Are there any long-distance 6-track rail corridors anywhere in the world? Isn't it simply the case (as someone mentioned) that dual-track standard-gauge rail was hugely overspecified for the needs of 150 years ago, and now we have a fair amount of legacy single track that can be upgraded at relatively modest cost because the ROW is wide enough for 2 or 3 tracks, or can easily be enlarged because it's in remote areas?

I'm about to relocate to a job in the suburbs of pre-WW1 megacity. My plan is to live in a walkable central neighborhood with redundant rail links to my place of work (reverse commute), and to manage without a car. So I'm on your side: I just think you could make your case better - and I'm sure you will.

And maybe that politically expedient way of adding capacity helps account for its still-negligible overall US market share, outside of New York City. Have you ever ridden the Lexington Avenue subway in from Brooklyn during rush hour? Who in their right mind wants to do that every day? Who in their right mind wants to live where they have to do that every day? And try it on a sizzling August day when the power goes out and the jampacked train gets stuck for an hour or two with no ventilation. And good luck getting the MTA to foot the hospital bill for the heat prostration. (Well, OK, granted, a few people feel they just must live in New York City, and for a few of those few, it's actually true, although what really keeps the Lex full is immigration, legal and otherwise - same as the Paris Metro and some other rail systems across the world. And anyway nobody ever said that Brooklynites are in their right minds...)

Or maybe, in at least some cases, just people too unimaginative or dimwitted to consider other options. It's a huge country, after all - Manhattan and downtown Brooklyn are only a very, very tiny part of it despite the image in the cartoon. But then again: "No one in this world so far as I know—and I have searched the records for years, and employed agents to help me—has ever lost money by underestimating the intelligence of the great masses of the plain people." (—H.L. Mencken, Chicago Daily Tribune, September 19, 1926)

As to the occupants of the trains, it's not just an American thing. One of my 'favorite' occurrences was the time when a couple of us got to the platform on the Paris Metro (RATP), and nothing was moving. Soon they announced (in French only, naturally, and well-garbled by the typical cheapskate PA system found on subways the world over) that service was discontinued (with no estimated time for restarting, and most likely due to a routine bomb threat but who knows.) So almost everyone just stood there obliviously as though their train was still about to arrive. Nobody there to speak of but tourists and immigrants from the Maghreb, none of them giving any sign of understanding any French. After all, the long-time natives were busy burning expensive fuel by clogging up the surface streets to near gridlock, as always. So we just left along with a few others, and took an RER train to the general area where we were going.

They would announce that no trains were running, and that people should take buses or whatever.

But no one believed them. They just said that to get people out of Grand Central. With the trains delayed, there were so many people backed up in the station that it was a fire hazard. So they'd say anything to get people out of the station.

Savvy commuters knew that, so they'd wait anyway, and usually the trains would be running again in an hour or two.

Actually, when we got to our RER destination, the RATP line still wasn't running. In Paris, at least, they really meant it. NYC, though, has a real problem at Grand Central, and the parallel Metro North (rough RER equivalent) line is not useful for local transportation. That's why they need the Second Avenue Subway, the one that's been mired in political corruption for, oh, the least 60 or 70 years, bonded several times and still not finished. It was even worse when they were running four-car trains to 'save money', as the platforms became packed and dangerous; maybe that's when you were working there?

An hour or two? And trains are to be our transportation salvation? What do you do with your evening plans when you're two hours late getting back home? Who gets the kids fed and off to baseball practice?

Heck, I hate waiting on a PLANE that's 2 hours late once a month, let along a train that I'd use daily.

Even if you drive, you run the risk of major and unpredictable delays, because the traffic is so heavy. So there's a lot of tolerance built into scheduling. (Indeed, you are more likely to be on time if you take public transportation.) They're really just a lot more laid back about punctuality there. I kind of liked it, frankly.

I'm not sure what your point is. That train breakdowns suck? Here's a hint: trains in other countries (except Britain) don't break down. Are the Brooklyn subways running a full 22 trains an hour, like the ones in Hong Kong or Tokyo? Where are you commuting from and to? Brooklyn Heights to Wall Street is one whole stop, about eight minutes. Cry me a river.

I used to live in Jersey City, and commuted to Wall Street using the decrepit old PATH system. Even so, it was very nice to live only two stops (ten minutes) from work, and not have to drive.

I have also lived 42 miles from New York, in a coastal suburb. It took me 90 minutes each way to get to work (on the train). Who in their right minds wants to do that every day?

I suppose part of my point is that most of the older train systems in this country suck rather badly, so who is going to vote to subsidize more of the awful same, and why should they? After all, people in upstate New York have been fed up for a very long time with pouring money down the New York City rathole, in return for nothing. And Alan's proposals for 'saving money' by making train systems suck even more badly only make this little part of the matter even worse. In the end, unless you are one of the very few whose occupation truly requires it, why even bother trying to live and work in a corrupt, crime-ridden, dysfunctional, massively overpopulated place like New York City, Chicago, or Los Angeles, at all?

Well, if you're gay, black or leftist you might feel safer in those places than, say, Laramie, Wyoming, where Matthew Shepard was beaten to death and hung on a fence in 1998.

And since the GOP white suburbs would not even exist without the pinko welfare negro cities you so clearly despise, moving to the suburbs is no national alternative, Kunstler's arguments aside.

As for corruption, the drug routes into America have corrupted many whitebread towns, and it will get worse, though not reported.

Most of all, as the book "What's the Matter With Kansas" points out, rural red-state America is getting poorer. If you require an occupation that pays more than $10 an hour, the cities (and ports) remain the gateway to the middle class that they have always been. My friend Mike, who worked dual jobs at the University of Houston as a mass-communications instructor and a systems tech (pretty bright), could not find a decent job when he moved to Hays, Kansas due to his wife's faculty job, and ended up as a salesman at a stereo store. Now he's back at UH and clearing 50 grand. As far as he could ascertain, Hays had no use for intelligent people at all.

A couple of points... it has been quite a number of years since upstate NY has been subsidizing downstate NY. The flow of tax receipts, AFIK, reversed with the decline of manufacturing and population exodus from upstate; two-third of the population is downstate, too. Try riding transit in a city or country where it works well (try Switzerland sometime). It is a national priority and it is designed by smart people and run by a conscientious work force. The reason rail and transit does work in the US is two-fold -- we spend too much of GDP on non-productive pursuits (e.g., military, prisons, medical, etc) and the TPTB do not want functional mass transit or rail because it would kill their sprawl machine.

Alan's proposals for 'saving money' by making train systems suck even more badly

Serial mis-characterization, but on this point, tighter headways IMPROVES service, longer trains is basically neutral from a service POV (great for economics) and only packing more people on-board makes service worse (but FAR better to be crowded on a train than a bus, due to motions & vibrations).

To be fair, mass transit in general and people on trains (especially shared rail) would have to get a lot better, but that shouldn't be THAT hard to do.

Testimonials, good or bad, pale compared to statistics, but my limited experience on public transit is:
- airport trams are slow and bumpy, but reliable and fairly deterministic
- the Metro in DC works pretty well, if you plan your hotel properly. Every public place (conference or tourist site) I needed to go seemed to be easier by Metro than by car. If I lived there I don't think I'd have a car, but I'd choose my situation carefully.
- the subway/train in Atlanta works fine from the airport to downtown and the mall area up north. Wandering off the tourist part of downtown was kinda scary at night. Otherwise it worked fine.
- buses in Atlanta are slow, late, and crowded. They fit for "adventure" and "vacation" but I'd prefer not to depend on them daily.
- street cars in SF are fine for where they go. The passengers are the most interesting in the world, so far as I can tell. I've never had more fun walking a city than there. BART seemed to work fine for the one time I rode it, but it was just for fun. If I lived in SF I don't think I'd even have a car.
- the NO buses and street cars I rode were just for sight-seeing and fun, and they seemed unobjectionable.
- trains in Europe (the low countries) seemed business like and efficient. That was a long time ago, though.

All in all, I like trains for leisure trips, and sometimes even for simple business trips (like conventions, where you have the airport and a convention center, and maybe some local dining). Usually there is always a sales guy with car if you need a ride, anyway.

I'm not sure I'd feel comfortable having my sixteen year old daughter take a sibling or two across town on a bus or train, though. I've had enough weirdos next to me that I can't imagine what life as a cute girl would be like. Ditto with walking in some downtown areas.

I think dedicated rail, or passenger trains get priority, a firm commitment to timeliness (better than the airlines, for sure!), clean trains, and highly visible security would be important to me. Surely this is all possible?

Well, maybe my mid-US experience is atypical, but here single women (alone or in pairs) will not go "downtown" near the bus station unescorted day or night, and I saw few single women on the Atlanta Metro except during busy daytime hours. Downtown Atlanta, though, was alive from early until late, and seemed to meet some psychological "safeness" threshold, as single women were prevalent, even at night.

But I also observed there were a LOT of "offical" people around (many with radios), helping with directions, sweeping up litter, watering trees, and so forth, plus a good smattering of cops.

Here suburban shopping malls pass muster, and of course suburban restaurants and mostly their parking lots do as well, but mall parking lots, Walmart lots, and other more desolate area don't at night. There is some density of people, lighting, and visible security that is needed, IMHO.

My wife and daughter have corroborated these biases, and I've noticed long-term that restaurants, clubs, and theaters in the "questionable" areas generally fail quickly after opening (except donut and sandwich shops that are open only during the daytime hours). My observation is that guys go spend money where unescorted girls can be found, and such girls are found only where they feel "safe".

Heck, there were places in SF, Atlanta, NO, and DC where I didn't really feel safe walking alone, and there are few who'd want to carry me off for unspeakable deeds! Mostly I was fine on the trains/trams, but there were a couple of times when crazy people made me uncomfortable. My favorite was the guy who was muttering "Shall I kill them? Should I kill them?........No....No...Should I?.......No...NO...." Then he jumped up, screamed at the top of his lungs, and jumped off the streetcar while it was moving at a decent clip, only to get back on his feet and take off running.

I don't think any of my daughters would be comfortable riding that line after something like that.

I realize I'm not a typical urban commuter, but I suspect my biases are not unusual at all.

Statistically, transit is uniformly the safest part of a city. But Suburbanites seem to demand armed security form the "Other".

TriRail is the South Florida commuter rail line (Palm Beach, Ft. Lauderdale & Miami) and I was shocked to see the conductors packing pistols. Miami has a gadgetbahn (MetroMover) going from one office building to another downtown and the "armed presence" at every station was oppressive and unpleasant to me.

Pre-Katrina New Orleans streetcars ran 24 hours/day and I "too often" caught the 3 AM or so streetcar and enjoyed being part of the party at the streetcar stop opposite Bourbon Street waiting for the every 30 minutes streetcar. Relatively few women party alone, but many get off work late at night and take the streetcar home (and a few come to work at 2 or 3 AM).

New Orleans has long been tolerant of the mentally ill (we get the Tourette Syndrome conference every other year because we are the most Tourette friendly city) and I really do not have a problem with them (more likely to reach out and help if I see a good opportunity).

I was once, and only once, robbed at gunpoint, by two clean cut early 20s white guys. One in an Izod and the other in a buttondown shirt. That experience has certainly made me quite leary of Suburbanites !

I've never claimed to like strangers (or non-strangers, mostly!), but to be fair my most personable wife does, and she is far more concerned about such environments than I.

Funny you should say that about armed suburbanites. I was just thinking, "Hmm...maybe it wouldn't be so bad if I were armed?"

Once long ago though, I was part of a rails-to-trails movement, and faced many completely irrational fears from rural farmers, so I can your side too. "Dope dealers from the city will push drugs to our kids". "Crime at night" etc. Of course, most recreational cyclists are affluent 20 or 30-somethings, most drug-dealers aren't going to ride 40 miles to sell some dope, and most rural kids are much more likely to see meth or pot locally than city dealers. The biggest risk for rural communities would be selling out of flapjacks and juice at noon on Saturday when the weekend riders wanted to take a break.

So I realize my possible irrationalities, but it'll take some time for my biases to relax. I spent almost a decade living downtown, and I gotta say suburbia is MUCH better living here than downtown (midtown is OK though). Maybe that will change too, someday?

To quote former local reporter Hoda Kotb, interviewed by her former station when she got the "extra hour" NBC Today Show gig,

"There is New Orleans, then San Francisco and then New York City. The rest of America is just McDonalds".

I walked to a superb, but little known, restaurant in a 1750s building (the former Jesuit hospital outside town) Le Citron Bistro for lunch today with friends. The waiter has a PhD in Social Work and does this for extra money (and social interaction) (He is also gay, wears a yarmulke and keeps kosher). The chef works for the City of New Orleans emergency management (former Military Intelligence) and comes out and chats after the last dish is served. Olympics and Georgia were the topics today, but also a bit of everything. The chef had some good insights on Georgia.

Warm, intelligent and entertaining conversation between strangers & friends (although I am no longer a stranger to the staff but my friends were) coupled with great food (I got the BEST fried green tomatoes I have every had as an appetizer. A good dark rue Shrimp & Sausage okra Gumbo) and a truly unique atmosphere.

I have a hard time imaging a better (and longer) Sunday lunch. What does Suburbia have to offer that compares ?

I'm sure that these kinds of places exist in other rural states, but in many places in Arkansas there are little diners in the middle of practically nowhere that cater to the local folk, travelers, and bikers. Some really good home-cooked style food can be found in these joints, in some of the most unexpected places. I was riding my motorcycle and came across this place in a town I can't even remember that was by the Mulberry River somewhere near Ozone, AR. The town had to have a mere 300-400 residents, but there was this gas station with a diner and mercantile store inside. The food was great (greasy spoon type) and lots of locals and bikers there.

These kinds of places have had more business lately as the locals decide to go there instead of driving further in to town when they don't want to cook, and I've noticed more people doing motorcycle riding for mini vacations instead of going somewhere in a car/RV/flying. It makes for friendly people, great food, and a good relaxing time. :)

It seems to me a variation on absolute and marginal returns. Gail can name it better. Roads, once built, incur huge costs to add beyond the original capacity. That might well put them into the realm of diminishing absolute returns, not only diminishing marginal returns. Rail would suffer the same problem - as the Lexington subway - but most rail of that sort is far enough under capacity to still be in the area of increasing marginal returns. There's a chapter about this in Tainter.

I suspect this issue of diminishing absolute returns underlies much of the turmoil in our economic world. Anytime we come up with a "solution" that makes matters worse, that suggests to me a case of diminishing absolute returns. Not enough oil? Drill more. Not enough fish? More boats. Not enough firewood? More loggers.

At first as a resource is exploited, returns are good. Sometimes ramping up increases efficiencies and returns are even better. Absolute and marginal returns increase. At a certain point the effort matches the return. Then it gets harder and marginal returns fall. Then absolute returns fall and it is no longer worth catching any sturgeon. Costs go through the roof. Very much related to EROI too.

Your premise, which seems sound, would indicate that for many energy technologies there will be a utilization curve with an inflection point at which marginal returns become negative, a point of maximum effective utilization, and perhaps another point at which the technology fails. For oil, there was a point at which EROEI started to decrease (likely there was short curve when it actually increased, as drilling technology matured), the familiar peak oil production point, and a point at which EROEI becomes less than 1.

This would imply that society needs to be mindful of the inflection point and peak point and start transitioning to another technology that still has positive-growth of ROEI. Wind and solar would seem to be candidates, as they have yet to really reach their economies of scale, but NG and coal are probably not, as they're already well into the EROEI decline phase. Nuke is probably past its inflection point too, with some externalities being included.

The problem is that these second-derivative points are not very momentous to a casual observer, though the first-derivative peaks will be. Once we pass the inflection point everybody subtly notices that they're pedaling faster to keep up, but it's not yet clear that they're getting behind until the peak happens.

One of the problems at least in the US is that energy has got mixed up with political ideology. Want to consume more fossil fuel at a faster rate, thats a conservative stand. Want to consume less, and build up renewable alternatives, thats a staple of the left. Once an issue is seen as potentially giving an advantage to one side or another in a bitter culture war, the ability to do rational analysis goes out the window. What you instead get are politically determined positions backed up by rationalizations.

However, I think the next generation of USA nukes will have higher EROEI than the existing nukes.

Better thermodynamics is part of it, efficiencies of scale and standardization another (almost every nuke site had a unique design before today). And MANY nukes were abandoned partially complete (and a few shut down early in their lives). All wasted energy and effort with zero to show for a 20% or 74% completed nuke that is scrapped. And scrapping after a dozen years of generation is not good either.

Best Hopes for Better Built Nukes, built at economic rates,

Alan

Rail does not generate energy per se, but the EROEI of rail improvements is outstanding. The useful lives of rail improvements are often quite long. The tunnels blasted and dug out by Chinese laborers for the first Trans-Continental railroad are still largely in use. I took the 1897 subway to ASPO-Boston. Perhaps half of the original investment is still in use.

The new 58 km TransAlp twin tunnels that Switzerland is drilling to create a flat straight path between Zurich and Milan under the Alps (two shorter tunnels of 10 & 20 km also needed) will certainly take a lot of energy to build, but how long will they last ? The infrastructure (signals, rail bed, power supply, etc.) are designed for 100 years before major maintenance. The tunnel bore may get Roman aqueduct lifespans.

I've noticed that there are many examples of old, durable, but inefficient designs being replaced by new, throwaway, but more efficient models. A new high-eff washing machine will pay for it's replacement in five years in energy savings alone versus the 20-year old model its replacing, but you'll need a replacement in about five years.

There has to be a changing factor in time-value-of-money calculations from peak energy that will push us back toward long-term investments and durability. In the case of the washing machine above, obviously what is needed is an energy-efficient machine that will also last 20 years like the older models did. As energy and money both get more expensive, durability of all products will need to increase.

I've often wondered if designers in the past really built stuff to last rather than that it was just more economic to build simple, low-precision designs that have the side-effect of being more durable. I remember seeing on TV a couple of years ago a documentary that said that, during the introduction of railroads to America the American trains used steam boilers based on the designs from the initial British designs rather than the latest, more efficient designs being used in Britain. The reason wasn't backwardness in the Americans but that given the lesser quality of American iron smelting compared to British iron smelting at that time the simpler designs were more reliable and cost effective to produce. The point is that clever designs adapt themselves to the available manufacturing capability. For example, I wonder if design for repairability will become more important than brute force durability?

Well, certainly the design you get reflects the design goals you state. Engineers can be terribly clever at optimizing a design, though there of course reality limits.

I have long noted that most designs optimize first-cost rather than lifecycle-cost, and that hurts us terribly long-term (especially in a downturn where you may lack the resources you had at the outset). For example, houses are built to maximize square footage per dollar first and then aesthetics. Energy economy takes a distant back seat. Orientation of the houses is based on development layouts that maximize the number of salable lots. Time and again it has been proven that properly-oriented, efficiency-maximizing houses cost hardly any more to build, save on energy forever, and are more pleasant to live in, yet the design goals don't change (to be honest, for some energy efficient houses beauty is in the eye of the beholder, but that perception too will change when the time comes!).

With sophisticated engineering, we should be able to improve efficiency, durability, and maintainability without much initial cost, though it will cost a little. Note that Honda and Toyota achieved this versus GM, Ford, and even Nissan, who all had varying cost and feature advantages but are now losing out to efficiency and reliability. I do think modern cars are currently less maintainable than older cars, and that is a problem that could still be addressed.

I think that in the past people were generally not as wealthy and thus expected things to be built to last or at least be able to be repaired easily rather than replacing them. Once people could afford to replace things then companies were only too happy to help them out by promoting more rapid replacement of models.

Now there seems to be very little consideration of repairability and durability over a long term. Many parts are plastic and these often break after a couple of years and spare parts cannot be bought. I find it difficult to believe that this is not intentional. I think we need to make all consumer goods have a 20 year life span and built to be easily repaired not thrown away. As a good start all Miele washing machines, tumble dryers and washer dryers are designed and tested for 20 years average use.

Along similar lines energy efficiency of domestic appliances is not a major concern since people mainly just look at the up-front price and appearance. I am pressing for an "efficiency tax" on electrical devices over their working life that is equal to the cost of offsetting the electricity (CO2) down to the level of the best performing devices. This will encourage people to buy A class devices.

Assuming 100 plants generating a gigawatt each over twenty years, roughly $0.005 additional per kilowatt-hour. Here in the North East, I am sure we will see several times this electrical rate increase this winter, as people substitute cheaper electricity for expensive fuel oil to heat their homes.
Hoping for minimal blackouts and brownouts, and staying warm this winter,
Everett

Nukes would have miserable EROEI if the energy required to babysit the waste for millennia is factored in.

Why? Sealing it in dry storage casks doesn't take much energy, even if you have to reseal them every couple of centuries. In a couple of centuries I'd expect we'd start using the stuff for fuel (and fission platinum group metals like rhodium) again anyways, so it sort of takes care of itself. The fretting about waste is a nonsequiter popular in the press, but theres precious little evidence that its an actual problem.

My favorite solution that I've heard is to bury nuclear waste under the billions of tonnes of chemical waste no one cares about.

Russia and Saudi Arabia trade places for the #1 world oil producer. Russian domestic consumption was 28.9% in 2007 (30+% this year) vs. low teens for SA so SA has always exported a million or two more barrels/day than Russia. But the #3 & #4 oil exporters (my guess Mexico (2003), Iran, Venezuela, Kuwait, UAE) are all much smaller than the Big Two.

Russian oil production was down -1.1% and exports down -4.8% (from memory) y-o-y in July. Russia has a flat tax on oil exports (in the range of $70) set quarterly. Before Georgia, Russian oil companies had good cause to hold off oil exports till the tax reset in 4Q08. Now a word from the Kremlin that "pipeline" problems and other "technical issues" could quiet the West could well see Russian oil exports plummet.

I have said this repeatedly, and will say it again: Every recent sign coming out of Russia indicates it is poised to be just as big an oil hawk as Iran or Venezuela, but with the oil export capacity and the nuclear weapons to back it up:

...they have good reason to fear the ambitions, and the wrath, of a rejuvenated Russia seeking to regain lost power. Indeed, a renascent and increasingly bellicose Russia is an ominous spectacle for the West too. While China preaches, and largely practices, the doctrine of “peaceful rise,” avoiding confrontation abroad in order to focus on development at home, Russia acts increasingly like an expansionist 19th-century power, pressing at its borders.Most strikingly, Russia has bluntly deployed its vast oil and gas resources to punish refractory neighbors like Ukraine, and reward compliant ones like Armenia.

He's like a throwback to a previous era. Do this mental exercise: picture GWB sitting down with Churchill and Stalin, discussing what could be done about Hitler's advance. Then picture Putin demanding a second front from Roosevelt and Churchill. Which one seems more realistic.

I'm not saying that Putin is Stalin, but GWB is definitely no Roosevelt or Truman, and I will be a lot more comfortable when we have a bit more of a heavyweight in office to deal with Puty-Put.

Can you imagine what the conversation was like when Putin went back and talked to his inner circle after he met Bush for the first time?

I'm sure they had a good laugh, but Putin also knows that Cheney has the same world outlook as he does, "our interests are the only ones that matter". Unfortunately, "OUR" for Cheney includes his friends raping the treasury.

Cheney is another deluded neocon whose thinking is dominated by ideology, religion, and Amercian manifest destiny (an interesting example is in a Christmas card Cheney sent to friends proclaiming how an empire does not escape notice from god http://www.mindfully.org/Reform/2003/Cheney-Empire-Christmas24dec03.htm). Hence, Cheney’s doggedness in invading Iraq, and the leader in the invade Iran mindset, dictated by ideology are contrary to American short term and long term interests. A true ruthless son of a bitch would have surreptitiously co-opted Iraq and Iran and avoided national responsibility if things went wrong.

When you have a revolving door in government and an out of control military industrial complex that hires former government officials it is pretty easy to fix the game in your favor. C Wright Mills documented this in the fifties in the book - “The Power Elite” and little has changed since. Strict rules should be in place to prevent former congressman and government officials to work for corporations dealing with the government either in a regulatory or business capacity. It will never happen - what is the use of spending millions of dollars to get elected if you can’t make it pay later. Just look at the owners of the Carlyle group. Will Rogers said it best, “We got the best politicians money can buy”.

And would it be less scary, if USA had a war mongering strongman idiot as a president? Err... scratch that.

But the point is: Russia has no interest in waging all out war against USA, but it also won't take no flak from other empires. Just like USA, but with a little less enthusiasm, because it's less powerful.

If it's interests are openly and clearly opposed (as has been done by other countries) it has responded swiftly and even brutally.

Do I like it?

No.

Do I approve of it?

No.

Do I think those situations could be avoided?

Certainly. It's called diplomacy. Putin has responded to that fairly well - it's just that Cheney & the sock puppet have not been very good at it.

Do I think Putin is a scary guy who is a throwback to another era and thus willing to take over the world from his evil Russian empire.

Of course not.

This is the real world. Not some Reagan era cartoon style brainwashing where every intelligent Russian is a deadly communist and only good Russian is a dead Russian.

Americans should really start inspecting their view of the rest of the world. The 'there be dragons' type of brainwashing has been going on for too long and it's getting really weary for the 'rest of us' (remember the 6.3 billion of us - we have a different world view)

Putin/Russia is just as scary as the US president or anybody else with enough of power, resource ambitions and a sizable army. Not more or less.

In the end, everybody just wants to live long and prosper - madmans excluded. Why should Mr Putin be any different? Clearly he's no madman.

I think what we SHOULD be worried about is not whether USA has opponents that are willing to oppose them, but whether we as people of various nations can deal with coming resource shortages without resorting to invasion, terrorism, war and torture.

That's what we should be afraid of.

Because in the end it doesn't matter who does it: Putin, Bush, Mr X or Lady Y. It's still scary as hell and certainly not right.

What we SHOULD be worried about is not whether USA has opponents that are willing to oppose them, but whether we as people of various nations can deal with coming resource shortages without resorting to invasion, terrorism, war and torture.

Oil is a magnet for war and it always has been. The Neo-cons wet dream of having an oil Bonanza after the invasion of Iraq should be viewed as a lesson that resource wars cannot secure oil supplies in the long-run. The disastrous intervention in Iraq has spawned an astonishing mix of hubris, one that often runs away with an implied thesis that the attack has been a force for the good.

Why are the Democrats so timid in taking on this administration as well as the Republican Machine over the War in Iraq? Every time I hear John McCain tell us that he "knows how to win wars" I get a sinking sensation in the pit of my stomach.

John McCain was in Viet Nam, so he knows how to LOSE a war - and he spent most of his time there as an involuntary guest of the Vietnamese government. It doesn't take much courage to get in a plane and drop bombs on people from a few miles up in the air.

I'm not a fan of Obama, either. It's just more "good cop, bad cop" distraction.

Peak Everything isn't something that can be solved by war. More aggression and imperialism (of whatever flavor, American, Russian, Chinese, etc.) just makes the "Olduvai Gorge" scenario become more likely.

Actually McCain’s Vietnam experience put him in a time warp in which the lessons of Vietnam war were unavailable to be learned. His papers after his release indicate his prison experience hardened the views he had before crashing his fifth plane and subsequent capture (a cheap shot, but I couldn’t resist). Views that were pretty much in line with the conservative draft dodgers who became the main players in the Republican party. Go figure.

Further, McCain was at or near the bottom of his Naval Academy class. Go to Talking Points Memo web site and view a video with the compilation of many of his gaffes, misstatements, errors of fact, and mind farts over the last couple of months.

The apparent state of McCain's brain and judgment should not given anyone confidence that this man has any idea of what he is talking about on a range of subjects. To assume that he has the mental capacity to lead, govern, or to win wars is a leap of faith based almost solely on the fact that he was a captive during the Viet Nam war. It is apparently not politically correct but the fact that he as a POW or a pilot during the Viet Nam war in no way supports the conclusion that he would be a great leader or an effective President.

Frankly, McCain apparent mental incapacity scares me. But then, I guess, his VP could really run the show based upon the Cheney model. But he is not even a good spokesperson for well, anything, including what might be considered conservative principles. His is an incoherent run by an incoherent man.

Why are the Democrats so timid in taking on this administration as well as the Republican Machine over the War in Iraq?
If the Democrats did take on such a crusade they would be crucified in short order by MSM. Remember the MSM provides the people the information by which they make their political judgments. Hence my doom and gloom tendency.

The Democratic leaders also have many investments in the current system. One millionaire might have very different convictions than another, but his portfolio is founded on the same premises of growth, corporate power and American domination.

Leonard Mardian is particularly bullish on the idea that many of his residents will make what he says will be a one-hour drive to work in central Las Vegas from the Ranch at White Hills, the first of his three planned communities about 30 miles southeast of the Hoover Dam and 40 miles north of Kingman.

Mr. Mardian, the owner of 47,000 acres in northwest Arizona, is not concerned about fuel prices; he said he believed that people would soon switch to cars powered by alternative fuel anyway.

Actually, sprawl may make sense with the right public transportation system. I lived for a while in central New Jersey near the planned community of Twin Rivers. Twin Rivers was created specifically for people working in Manhattan, because the 50-mile commute from Twin Rivers was quicker than taking the subway from the outer boroughs of New York. Several times a day, a bus makes several stops in Twin Rivers, and then goes non-stop to downtown Manhattan. It winds up being both more comfortable and quicker than the subway.

A hub-and-spoke system of fast trains (or buses) could allow for sprawl to continue, at least where jobs are centralized. From a commuting time perspective it is practical to live far from work, because the bulk of the time is taken by the very end of the commute as you enter congested areas. The "far" part of the commute is very fast, because it can be done at high speed.

I suspect a place like Las Vegas could do well with a hub-and-spoke mass transit system. There is no reason to live downtown, if you can get downtown in 15 minutes on a fast train. I think this is true of a lot of places, and in those places suburbia could survive, even thrive, if appropriate adjustments are made to the transit system.

Other areas would be harder. Where I live (wester suburbs/exurbs of Philadelphia), the jobs are not concentrated in a center. We could really use a point-to-point transit system (which is what we have today with cars), or else have a longer commute navigating in to the central hub and then back out to the jobs.

Note that I'm not saying this is necessarily good or bad, just that it can be practical. We have a lot of capital invested in suburbia, and I don't think we have any cities that could handle the population increases that would result from the suburbs collapsing back on the central city.

Those developers should hire the writer from Milwaki who did the piece mentioned top side, We can drill our way out. That guy is able to stretch things quite a bit by lumping together methane hydrates with proven and projected reserves of oil shale, natural gas and petroleum, coal and uranium in North America. Just think, uranium powered cars, just like the sci-fi dreams of yesteryear. And these idiots get paid for their lack of understanding of reality?

The latest evidence comes from Senator Barack Obama, who in less than a week has reversed his stance on tapping the Strategic Petroleum Reserve, softened his opposition to offshore drilling and unveiled an out-of-nowhere proposal to impose a windfall profits tax on the oil companies and funnel the money to consumers in the form of a $1,000 tax rebate.

Compared with his slightly hysterical opponent, Mr. Obama had been making good sense on energy questions, and his recent speeches had included a menu of proposals for energy efficiency, conservation, alternative fuels and new technologies.

Yet public opinion polls showing deep voter discontent with fuel prices — and Senator John McCain’s steady pounding on the issue, including television ads blaming Mr. Obama personally for the rise in gasoline prices — have caused high anxiety among Democrats. They also seem to have persuaded Mr. Obama, who earlier had resisted gimmicky proposals like a gas tax holiday, to strike back.

Obama is primarily respected for his intelligence but this race to the bottom denominator on energy is the race of the stupid. Stupid might actually be a good strategy, though, since recent elections demonstrate that stupid is not a handicap. Obama is trying to assuage people's fear that he is an elitist, that he can just be as dumb as the rest of them.

The hope would be that once he is elected, he will start advocating and implementing responsible policies that reduce our energy consumption and provide renewable alternatives that help us reduce greenhouse gases. But that would require long term thinking, major financial investments, postponement of immediate gratification, and tax increases. Ain't gonna happen as we live in the U.S., Free Lunch Nation.

The hope would be that once he is elected, he will start advocating and implementing responsible policies

So the more Obama is lying to us now the better he'll be after he's elected? In other words, the hope is that everything he is saying is "just to get elected" and then he'll reverse course. Fat chance. Vote for Obama and get $1000 check. Why shouldn't McCain to up it to $2000 - he'd fund it by cutting services to all those immigrants instead of taxing oil companies. But in final analysis, both of them would just print the money. Talk about "solutions" making matters worse.

It seems like the word "hope" is quite often associated with Obama. I would like to have fewer hopes and vague generalities and more plans with details.

I think we have at least 4 more years before we have an opportunity for a strong president, and boy will we need one then, as peak energy will almost definitely be here and the national debt will be rolling over for refinancing as well.

"I would like to have fewer hopes and vague generalities and more plans with details."

Giving plans with details is almost guaranteed to lose you the election.

I actually think that Obama will make a pretty good president. He is smart, slick and knows how to influence people. Kind of reminds me of Bill Clinton.

That said, I think whoever wins this next election will get caught holding the bag, and will be a one-termer. If McCain wins, I think Hillary could win in 2012; if Obama wins, I see a Republican victory in 2012 unless Obama really pulls a rabbit out of the hat.

If this is planning, I would hate to see the results of unplanned communities. And who will be paying for all the infrastructure to get these people to and from Las Vegas anyway. Developers should be required to pay upfront for the full external costs of their self centered dreams to develop what would otherwise be their worthless land.

Where is the silver stake that will finally kill not so happy motoring driven by planned suburban sprawl?

And who will be paying for all the infrastructure to get these people to and from Las Vegas anyway.

For an answer to that question, one has to search no further than the nearest mirror:

A $240 million, four-lane bridge across the Colorado River is due to replace the two-lane road that now crosses the Hoover Dam between Arizona and Nevada in 2010, making travel between the areas much easier.

They struggle just to keep earnings comensurate with the rise in the price of oil and gas. Oil is up almost 4-fold from five years ago. Natural gas almost 2-fold. (Avg. price 1st 6 months 2008 v. avg. for 12 months 2003). Yet the increase in earnings of many oil and gas producers (Chesapeake, EOG, Anadarko, Devon, ConocoPhillips, Apache) barely kept up, or did't keep up, with the increase in the price of oil and gas.

This is so not only because the cost-per-foot-drilled is on the rise, but, as you point out, more and more feet must be drilled in order to find the same amount of oil or gas.

To satisfy Wall Street's dual demands of increased earnings and increase reserves/production is almost an impossible task.

I have been trying to think up a way of sorting prices rising because of falling EROI from prices rising due to real demand inflation (customers competing for limited supplies). One way to do it is to look at profit margins. Where margins are up that signals real demand and where margins are flat or down, that signals EROI.

Any thoughts on how to gather that data for whole areas of the industry? Casing pipe, rigs, etc.

I only follow the oil and gas producing companies and not the oil service companies, so I don't know how their profits have fared relative to the price of oil and gas.

I suspect, however, that they have the same problems that domestic oil and gas producers do. If an oil and gas producer elects to produce legacy reserves, investing little in finding and developing new oil and gas, then it can show substantial profits. However, if an oil company wants to grow production and reserves, or even maintain them, I have my doubts that $110/barrel oil and $10/MCF gas (avg. price first 6 months 2008) are sufficient to cover the costs of finding and producing that new, incremental production. The earnings of these more aggressive companies therefore often fail to keep pace with the price of oil and gas. Some smaller producers maybe can beat the odds, but it seems the larger the company, the less liklihood of this.

Likewise, a drilling contractor can probably make a bundle by utilizing its old fleet. However, if it wants to grow that fleet, with the exorbitant capital cost of building new rigs, its profits would certainly be lower.

I've never looked at the financial statements of any of the drilling contractors or other oil service companies, so I don't know how much information could be gleened from those.

But, if they are anything like the financial statements of oil producing companies, one might be surprised at the amount of information that is there.

Warren Buffet is a great proponent of reading these financial statements from cover to back, and with good reason I think.

The McCain drilling strategy is a win for the Republicans, maybe just in time for the November elections.

More drilling will the lower the rate at which the U.S. is increasingly dependent on imported oil in the distant future.

Drilling for oil in ecologically sensitive areas is a partisan political issue.

The impacts of Peak Oil, however, will soon shift the focus of debate toward how to survive high oil prices, maybe as soon as an attack on Iran.

Increasingly, average Americans will not be able to afford both fuel oil for heating and gasoline for commuting to work (starting in to be felt more in November). When unemployment increases in the ever worsening global recession, a larger and larger percentage of people will not be able to pay for fuel oil to heat their homes. These realities will shock the nation with big increases in home heating bills this winter (starting in November). Oil prices will be higher for the winter of 2009.

In such an environment, the Democrats are making a mistake with their “no drilling” [now some drilling] position on this issue. Pelosi and Feinstein could lose some votes on this. As Peak Oil becomes more widely known as the cause of economic malaise, public attitudes will shift away from environmental concerns and toward more drilling.

According to energy investment banker Matthew Simmons and other independent forecasters, global crude oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.

This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.

Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.

We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.

While I agree with 90% of your basic comments, it's somewhat of a stretch to see how you came up with your conclusions about winning the Presidency based upon a drilling position alone.

Even though the rampant and somewhat reckless exploitation of all available natural resources is a basic American idea, latching on to that greedy concept and its misplaced neglect of our resourceless future doesn't equal a McCain win.

Actually on the left, Obama is considered to be a hard core compromise seeker, i.e. leftists do not consider him to be a true member of their club. But, as for perception (which is 99% in politics), I think you are right, Obama is characterised as being too far left. The main points of attack:

(1) Is elitist, i.e. cannot really identify with the common man. This charge could really to leveled against anyone whose possesion of a skill, gives them advanatges enjoyed by only a few.

(2) Is leftish. Or left of you (a targeted voter).

(3) Is black. This is a tricky one, as Americans consciously want a postracial society, but unconscious biases are begging to be exploited. So appeals have to be under the radar, if they are too obvious they could backfire in a spectacular way.

The anti drilling, anti Nuclear attitude is IMO a potential wedge against him. A grossly inflated perception of the risks of these is very strong on the left, and politicians can't afford to get too far out of step with their base. I think the Democratic wiggle room is limited. The potential for damaging charges of flip-flopper make it even less.

A recent paper reported in sciencedaily (I don't have a link, it was about a week ago), claims that voters (they studied Europeean voters), prefer someone whom they think is true to their principals, over someone who can find compromise. I think this also goes against those whose principals don't closely map the principals of either party, their ability to side with one side on one issue, and the other on another makes them appear unprincipaled, because they are being measured on an artificial one dimensional scale.

I thought a long time ago, when I heard about the conservative think tanks getting started in the 60's (liberals didn't catch up until decades later), that one of their most effective tactics was the "liberal media bias" push.

They've effectively moved the perceived Left-Center-Right spectrum far to the right. Now the old left liberals are "wacko commies" and the "acceptable right" has swung to include the extremist fundy conservatives.
Now, even if we get a "left" democrat in office, they're really a centrist.

They've effectively moved the perceived Left-Center-Right spectrum far to the right. Now the old left liberals are "wacko commies" and the "acceptable right" has swung to include the extremist fundy conservatives.
Now, even if we get a "left" democrat in office, they're really a centrist.

How can we swing this back to reasonable?

Examined on a European right-left scale, the Democrats are to the right, of the European right.

On this side of the pond, we have a number of well funded political institutions, AEI, CEI Rand etc. whose purpose is to tilt the playing field as far to the right as possible. They use, and in fact originate many of the tricks, and pyschological marketing efforts of the Republicans. The fact that we have moved so far to the right, and routinely elect a party whose views are far to the right of over 60% of the population, is a testament to their success.

I had always considered myself as a lifelong centrist. One whose job was to play balance of power, i.e. if either party threatened to gain too much influence, I would swing counter to the trend. Now I need not make that distinction, and simply claim to be a Democrat.

Exactly right. If it were possible to somehow translate the US Democratic party into almost any other nation's political context, it would fit comfortably as a center-right party. The Republicans would be a far right party anywhere. The US simply does not have a politically meaningful left wing. Most Americans have been made so ignorant and brainwashed that they have no idea how extremely right wing their country really is.

Why can't you stand Obama? What are the doubts about Obama that you consider to be "considerable"?

I have heard many things over the last several months. "Obama's middle name is Hussein, and I'm tired of hearing Hussein!" "Obama is an elitist!" "Obama is a Muslim!" "Obama's pastor is a radical!" "Obama is inexperienced!" "Obama is a celebrity!" "Obama is not white!" (As if that's a crime!) Are any of these arguments a basis of your dislike of him? Or do you have something more objective?

I must confess that I am of more than two minds when I hear stuff like this. On the one hand, I look at the extent to which corporate media has been able to short-circuit the critical thinking of most Americans, and how it has resulted in political campaigns characterized by throwing emotive phrases around to evoke images designed to produce a Pavlovian response in their intended audiences. This is the essence of Hillary's failed campaign, and of McCain's present campaign, and it makes me want to hurl. It almost worked for Hillary and it may well carry the day for McCain, but it's a sad day when voters in a US presidential election can be swayed by the media equivalent of a dinner bell. Have we all been turned into dogs?

On the other hand, I think even Obama is trying to win the election by making himself into a mere symbol - a symbol of "change." Yet when one looks at his policy reversals over the last two months, he is not really offering very much substantive, objective change, just as a dinner bell is not really a steak. But change is what we need right now. We do not, I repeat, do not need more drilling off the coasts of the US. We do not, I repeat, do not need to open up the Strategic Petroleum Reserve.

What we do need, and desperately, is for supposedly adult Americans to realize that we have run up against functional, structural limits to ever-increasing consumption. We need to accept this fact as adults, and to prepare to live with this reality in an adult manner. To do this, we have to turn off our expensive plasma-screen home entertainment centers, turn off our mp3 music, stop our endless distracting of ourselves, and actually think. But such a response is not likely, since it seems that Americans are eating up stupidity like it was cereal. I say this even though I too an American.

BAKU (AFP) — Azerbaijan has halted oil exports via the Georgian ports of Batumi and Kulevi due to clashes between Russia and Georgia, the head of the state oil company said Saturday.
"Since last night the import and export of oil through the Georgian ports of Kulevi and Batumi have been halted," said Rovnag Abdullayev, the head of the Azeri state oil company SOCAR, in televised comments.

"This is due to armed actions in the area of the Georgia-Ossetia conflict."

This is weird.

Batumi is Russian Ajari. Kulevi is next to/same as Poti, where reports have Russia
making it useless.

Sun Aug 10, 6:26 AM ET
KIEV, Ukraine - Ukraine warned Russia on Sunday it could bar Russian navy ships from returning to their base in the Crimea because of their deployment to Georgia's coast.

But RIA-Novosti news agency quoted a defence source as saying Russia had no plans to mount a blockade.

"A naval blockade means war with Georgia," the source told RIA. "We are not at war with Georgia."

The force included the missile cruiser Moscow, the warship Smetlivy and backup vessels, RIA said.

But RIA-Novosti news agency quoted a defence source as saying Russia had no plans to mount a blockade.

"A naval blockade means war with Georgia," the source told RIA. "We are not at war with Georgia."

The force included the missile cruiser Moscow, the warship Smetlivy and backup vessels, RIA said."

A blockade is a formal act of war, which has legal and diplomatic connotations that the Russians probably don't want to get into. When the USA stopped Russian merchant ships from entering Cuban ports, they called it an embargo - I'm sure the Russians have learned from their example. Lots of info on this in Wikipedia if you're interested.

One commentator, Richard Hawrelak, who is familiar with the proper design of these facilities was also critical of this point and, in particular, our lax regulations. He is quoted as saying "In the States, they've got a damned good system...(In Canada) it's a toothless, gutless wonder." Perhaps this incident will help change that.

Sadly, there are now reports a firefighter at the scene has been taken to a nearby hospital and that this individual has no vital signs. Let us all hope that he can be revived and makes a full recovery.

Indeed. Although I don't live in the area, I do know it, and I was surprised to hear there was a facility like that there. It is mostly a quiet residential area. I have a colleague who lives quite close by. Fortunately he was away at the time, so safely out of harm's way. Not sure about his house though.

You also need to add "non reportable" into the equation. these are small speculators.
Spreads are basically neutral positions in terms of barrels.
Spreads could be futures spreads or option spreads.
Futures spreads would be for example someone who is Long 1 dec 2016 contract and short 1 Dec 2008 contract i.e hoping to benefit when prices for short term contracts fall more than that for long term contracts.
Option spreads are way more complicated and have multiple examples.
1 would be....long $135 call for dec 2008 and short 1 $150 call for dec 2008.
You would make money in the $135 -$150 corridor and not make anything more after that. Hope this helps.

Because they trade across "party" lines. To illustrate, assume a skewed example, e.g., that all commercials go short by selling future production that they expect to produce. And then assume that the only buyers were noncommercial speculators. Then noncom shorts would be zero and noncom longs would be a huge number.

ISTANBUL — In Turkey, where borrowing money was until very recently a family affair, being in debt carried a fearful stigma. Some here even likened it to the disgrace that drives people to commit the honor killings that still occur in parts of this society.

“People who would kill their sisters or daughters for bringing shame on the family would do anything to avoid being labeled a debtor,” said Nazim Kaya, the president of Consumers Union, an advocacy group that helps those who fall into debt.

But in a cultural shift that has swept aside centuries of tradition, credit cards have become commonplace here. Only three decades ago, Turkey had fewer than 10,000 cards; today it has more than 38 million.

A centuries-long cultural stigma against debt, brushed aside in a few years.

I have lived in Mexico for the last 7 or 8 years. When I first came here it was pretty much a cash and carry society. If someone drove a nice car, it meant they had money.

Not so any more. Since then the country has been flooded with easy credit, and all anyone needs is a job to land that new auto.

And the change in behavior this causes is astonishing. A person who stands to lose his car and his house if he misses a couple of payments is a person who very much has his nose to the grindstone.

In a credit society like the United States I suppose it is difficult to imagine another way of being. A person who is accustomed to having house payments and car payments really doesn't realize how much freedom, independence and peace of mind he is sacrificing.

Stratfor reports conflicting news on downed planes, and on whether Georgia has retreated. Russia and one "unnamed Georgian source" say they've moved around but have not withdrawn to the border.

Georgia says the Russians bombed through the night, and Tskhinvali has essentially been leveled, but other reports say Russian troops have entered the city.

Russia has supposedly put a peace agreement on the table.

I assume more details will come over time. It'll be interesting to see how air defenses worked, and whether the Georgia stuff (maybe with some toys from us or Israel?) worked against Russian air compared to how the Russian stuff fared in Iraq (and maybe eventually Iran?) against ours.

Nice one Carl, I'm sure that bringing out the nazi card at this stage is going to help in making headway with the ceasefire negotiations.

Make no mistake, I think Russia is the aggressor, there's no excuse and I want this to stop as of yesterday. But I don't think this type of anti-diplomacy helps any better than what the Europeans did with USA and Afghanistan / Iraq. For some people it just strengthens their resolve.

Stephen Leeb was just on CNN. He said low oil prices are actually bad news, because if prices drop to $90, a whole bunch of projects will be canceled. He said the problem has not gone away: increasing demand, flat production.

Cities are quite likely (IMO) to retain organization that supports such specialized services as medical care longer and better than outlying areas. They are also likely to support civil order and rationing of available resources better.

"Good" cities have better, and more diverse, transportation alternatives.

"Good" cities provide critical goods & services that enable them to trade for other critical goods and services.

I guess there would be a lot of sorting out, people gravitating to those environments in which they could do the best. For me, my focus is on as much sustainability in food and energy as I can put together and I don't have a clue on how to do that in a city. I suspect that for a city to function to some degree the social structure will become intensely hierarchical. Those in the upper reaches could do well. In my case I'd end up near the bottom.

It is not that difficlut to build a small house that is self sufficient in energy (and enough left over to charge and e-Bike. A spare refulat bicycle and several good pair of walking shoes. That takes care of energy.

Several years of basic food can be stored easily and cheaply, but the USA is a massive food exporter (just eat all the corn we are wasting on ethanol and feeding cattle, etc. if productivity falls dramatically.) Large areas of rice nearby, plus massive grain elevators (several years worth of food for 1 million in each SWAG).

Medical care, more than food and energy, are likely to be in shortest supply.

I think this one has a good chance of going for Florida, but it's really to soon to tell. Once a tropical depression forms in a couple the computers will lock in nicely, and we'll have a much better forecast for risks (which are still a week away).

On the bottom picture of ocean temperatures, one can see the larger than usual cool water volume at the mouth of the Mississippi River.

Best Hopes for Cooler Water,

Alan

BTW, the best local meteorologist is "speculating" that we will miss a Cat 3 or larger this year in New Orleans. Several factors from Tutts to more than normal cool waves to extra cold fresh water this year.

Ocean temperature 4 degrees Celsius above normal off the coast of Nova Scotia. Great for swimming and surfing but we're a bit skittish ever since Hurricane Juan delivered a whopper Category 2 to our shores in 2003.

Historically, hurricanes would hit the cold waters of the Labrador current and fizzle to tropical storm status before getting too far north. Not any more!

Sure, the current ocean temperature configuration may reduce odds for the off-shore rigs in the Gulf of Mexico but there are a few on the Newfoundland Hibernia field that could be vulnerable.

Not the same factor of refinery infrastructure in this neck of the woods though.

A heartfelt wish for a quiet 2008 Hurricane season. May all current storms blow themselves out before reaching landfall.

just a off-ball comment, but has anyone here found that finding about peak oil has made 'the future' a arguing point with your family? that if example they watch a show called 'vision's of the future' do you find yourself trying to point out that these things can't possibly come true?

The Greek myth of Cassandra gave Cassandra foreknowledge but her curse was she wouldn't be believed. The Biblical character of Jeremiah was exactly the same but I would accuse biblical scripture of more than a little plagiarism.

Yes, I've found that I can steer any conversation onto the subject of energy because that's how I see everything around me now. However my family have also worked out that any subject can set me off and just go quiet and pretend that I didn't say anything. It's like breaking wind in a lift (elevator). Everyone can smell it but no one wants to raise the alarm. If you do raise the alarm you're the outcast.

My kids lived with my views all too many years. Since I didn't get across what I consider a realistic evaluation of the perils, my bad. So, I've 3 acres set aside for them in case.... I'm not nearly as certain as many on TOD that disaster is coming but (as a metaphor) I think it best to multiply the probability times the cost.

Has this been substantiated by any source that doesn't end up sounding like a viral e-mail (send this to everybody you know)?

I had heard that there were times that 3 or 4 carrier groups would happen to align in the Gulf due to force rotations being on skewed schedules. Something like every couple of years, IIRC.

Even if the force picture were accurate, the biowar items, super-secret Russian stealth, and a likelihood of any of that getting used seems unlikely. I'd heard the aircraft incident, but not any connotation of stealth along with it.

If anybody unleashes an infective bioweapon I strongly suspect their would be no world defense for them, as everybody nation would be a target.

I'm not one to say an attack or blockade isn't possible, but one blog doesn't seem credible to me.

I dunno. Didn't find much corroboration, but life seems to get stranger by the week these days, or on the other hand, one could argue that events continue to unfold as the script for "Peak OIl: The Movie" would suggest.

Hmmm....from a quick check I don't see anything to refute the story. The story itself has been repeated on-line plenty of time, from Google hits.

Here's the latest "official" news I find on the Reagan:

Four ships and more than 5,000 Sailors of Carrier Strike Group (CSG) 7 departed Japan, July 31 and August 1, after routine port visits marked by numerous displays of good will and community service throughout the country.

The strike group's flagship, the Nimitz-class nuclear aircraft carrier USS Ronald Reagan (CVN 76), embarked Carrier Air Wing (CVW) 14 and the guided-missile destroyer USS Howard (DDG 83) left Sasebo, while the guided-missile cruiser USS Chancellorsville (CG 62) departed Yokosuka, and the guided-missile destroyer USS Gridley (DDG 101) departed Fukuoka.
.
.
.
The Ronald Reagan Carrier Strike Group is currently in the U.S. 7th Fleet's area of responsibility as part of a routine deployment to promote peace, cooperation and stability in the region.

Note that the 7th Fleet wouldn't normally be active in the Gulf Region.

The Roosevelt is indeed also afield:

USS THEODORE ROOSEVELT, At sea (NNS) -- USS Theodore Roosevelt (CVN 71) departed Naval Station Norfolk July 18 for a historic collaboration between the U.S. and French navies.

French E2C Hawkeye early warning aircraft assigned to the 4th Squadron began flight operations with Carrier Air Wing (CVW) 8 aboard Roosevelt, marking the first integrated U.S. and French carrier qualifications aboard a U.S. aircraft carrier. French Rafale fighter aircraft assigned to the 12th Squadron also joined.

"Operations with our friends and allies are the cornerstone of the U.S. Navy's current maritime strategy," said Capt. Ladd Wheeler, Roosevelt's commanding officer. "These combined operations will certainly pay dividends into the future as our navies continue to work together to increase global security."

Yeah, from the Lord-High-Mucktymuck of Canada or something. The author has about fourteen other titles he's assumed or bought. Lives in a medium sized town in the midwest USA. I'd say he's a nutcase and call BS. Not to get all ad-hominem about it, but really.

On the other hand, there's a guy I know on one of those carriers ... not sure where they're stationed, he can't say. My impression is they're in the Western Pacific for some kind of war games. His story doesn't conflict with the Mucktymuck's, but it doesn't really lend it absolute credulity either. They could just as easily turn around and head for San Diego, on schedule, in another week or two.

POT has recently released an excellent overview of the I-NPK situation, with lots of charts, and with some forecasts out to 2020. A much better effort than I could ever hope to do, but sadly, no evidence of included info and discussion on Peak Oil, Peak Natgas, and ELM effects.

Re the loss of the 'lower lakes' on Australia's River Murray. I used to canoe and sail on those lakes and I ain't that old. What seems to be happening is
a) humans are accelerating geo-change OR
b) we now have a knife edge dependency.

In other words we either changed the rainfall patterns or took too much water out of the rivers, or a combination of those factors. Some say the dinosaurs took 10,000 years to die out but humans are witnessing major changes within a generation. Those of us around now may have seen the passing of peak nature appreciation, peak mobility and peak diet. That's a tough legacy for future generations.

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